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Archive for Wednesday, December 23, 2009

Government tax credit drives surge in home sales

December 23, 2009

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— Extraordinary government efforts to stabilize the housing market are paying off. What happens when the help runs out is anyone’s guess.

Sales of previously occupied homes surged in November to the highest level in nearly three years, spurred by federal subsidies for starter homes and a massive Federal Reserve push to drive down mortgage rates.

The strong figures were driven by a race to take advantage of a tax credit of up to $8,000 for first-time homebuyers. The credit has since been extended to next spring, but the government initially planned to end it Nov. 30.

The pace of home sales is now up 46 percent from its bottom in January and still 10 percent shy of its peak from four years ago, according to data released Tuesday by the National Association of Realtors.

The real estate recovery depends not only on taxpayer dollars but also on the health of the economy at large, which grew at a less robust pace in the third quarter than previously thought.

The economy grew at a 2.2 percent annual pace from July to September, down from an initial reading of 2.8 percent, the government said Tuesday.

Experts think the economy is even stronger now than it was last quarter, but they expect it to ebb again early next year. And that’s when the tax credit will wind down and the Fed plans to stop buying mortgage-backed securities, which could raise mortgage rates.

Whether the real estate rebound can continue without the help remains to be seen.

While prices for homes in many parts of the country are still falling, analysts said the tax credit clearly helped the volume of sales.

“In the short run, it’s an effective stimulus,” said John Ryding, chief economist at RDQ Economics. “If you give someone money to spend on something, they will spend it.”

With April 30 as the new deadline, experts forecast sales will drop during the winter and pick up again in the spring. Without the looming deadline, “buyers have no sense of urgency now,” said Gary DeRosa, an agent with ZipRealty Inc. in Seattle.

About 2 million homebuyers have taken advantage of the credit so far, the Realtors group said.

Overall, sales of existing homes rose 7.4 percent in November to a seasonally adjusted annual rate of 6.54 million, up from 6.09 million in October.

Comments

melanyor1 4 years, 1 month ago

This comment was removed by the site staff for violation of the usage agreement.

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smitty 4 years, 4 months ago

Trickle down....drip drip drip drip....corporate welfare economy....

You may now have an inkling of what the non-Reagan worshippers felt?

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barrypenders 4 years, 4 months ago

It may appear to be fake, but to the Barack Obama supporters, it's not. Their love for the man is unprecedented. We all need to support those that don't work because it is the "humanitarian" thing to do. Barack Obama's leadership around the world is respected, and admired.

Stimulus, ME GOT, and Posercare live unprecedented

Darwin bless you all

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monkeyhawk 4 years, 4 months ago

No more eggnog for barrypenders.

Everything about this economy is fake, from clunker cars, unemployment numbers, the GDP, the deficit and health control to the stock market.

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barrypenders 4 years, 4 months ago

People that make money need to give it to people that don't work or have any. Breeding practices as they are among people, it is the kind thing to do, and Barack Obama is just the man to mandate that we all take care of each other. It's the Christian thing to do.

Stimulus, ME GOT, and Posercare live unprecedented

Darwin bless us all

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Healthcare_Moocher 4 years, 4 months ago

And the redistribution cycle continues.

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barrypenders 4 years, 4 months ago

Barack Obama is the greatest. He will fix everything. If you can't afford something by working, just feel for his learship to take your troubles away.

Stimulus, Money Eternal Grows On Trees(ME GOT), and Posercare live unprecedented

Darwin bless you all

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Lee Eldridge 4 years, 4 months ago

Hhhmm.

Also from an AP writer: November new home sales sink 11 percent

"Sales of new homes plunged unexpectedly last month to the lowest level since April, a sign the housing market recovery will be rocky and heavily dependent on the generosity of Uncle Sam."

http://www.google.com/hostednews/ap/article/ALeqM5i2oWiNsPQpakRTA0sYe8x_5DkEXwD9CP73701

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Brent Garner 4 years, 4 months ago

And this creates an artificial demand in the housing market not supported by the true underlying strength of that market. So what happens when the tax credit ends, or does the author propose that it be extended indefinitely?

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